Canada basic wireless prices rise, average costs fall

OTTAWA (Reuters) - Changes allowing Canadian mobile phone customers to cancel their contracts without penalty after two years have increased the prices of basic plans, while overall average wireless costs continued to fall, a study to be released on Monday showed.

A pedestrian is reflected in the window of a Telus store while using a mobile phone in Ottawa February 11, 2011. REUTERS/Chris Wattie

The price of mobile services has become a hot issue, with the Conservative government trying to drive prices down by encouraging smaller companies to challenge the dominance of the Big Three: BCE Inc’s Bell, Rogers Communications Inc and Telus Corp.

The government-commissioned Wall Report showed the average price of three types of wireless plans was now 22 percent lower than in 2008. Last year the average was 18 percent lower than 2008.

The savings were concentrated on high- and medium-volume users, with the price of basic plans rising due to the regulators’ December decision that effectively put an end to three-year contracts.

Though aimed at stimulating competition by letting people switch phone companies, the decision ended up boosting prices at the bottom end as carriers tried to recoup their subsidies for handsets faster.

The Wall Report, a copy of which was seen by Reuters, showed the average monthly charge for basic mobile wireless service rose to C$35.70 ($33.36) in 2014 from C$30.71 in 2013 and C$32.73 in 2008.

The price of medium-volume service edged up slightly to C$45.26 from C$44.86 in 2013 but was down from C$60.81 in 2008. High-volume users’ prices on average declined to C$79.69 from C$93.59 in 2013 and from C$112.34 in 2008.

The Wall Report noted that the main phone companies had introduced alternative no-term BYOD, or bring-your-own-device, plans that can yield a discount of C$10 to C$20 a month.

The study showed prices by companies newly operating in the market were 10 percent to 49 percent less than the incumbents, and they usually offered higher data allowances.

The Wall Report, which is done annually, introduced a new comparison this year, of international roaming rates to and from the United States for Canadian and American consumers.

It found the big U.S. players’ roaming call and text rates in Canada were lower than those in the United States from Canadian incumbents, while the reverse was true for data - effectively a draw.

But the study found the new entrants in Canada offered far lower roaming rates than the Canadian incumbents, while U.S. regional carriers offered very limited or no roaming services in Canada.